Because so many people have them, most people know what a mortgage is. But do you know how the loan came to be in the first place? Here's a brief history of the mortgage and how it got started:
At first, a mortgage was just a fee-based transfer of land. The buyer paid the seller a set rate with no interest, and the seller signed over the land to the buyer. Just like today, there were usually conditions that had to be met before the buyer could own the land. However, these conditions were usually based on the idea that the land would bring in enough money to pay back the seller. So, because of this, a mortgage was written. The mortgage stayed in place whether the land produced or not.
But this old system was very unfair because the seller of the property or the lender who held the deed to the land had complete control over it and could do whatever they wanted with it. This included selling it, not allowing payment, refusing payoff, and other things that caused huge problems for the buyer, who had no say at all. As time went on and the mortgage system was clearly abused, the courts started to back up more of the buyer's rights, giving them more support when it came to owning their land. In the end, they were able to ask that the deed be free and clear when the property was paid off. Still, steps were taken to make sure the seller had enough rights to protect their interests and make sure they got their money.
Some states in the U.S. have made their own version of the mortgage. These states are called "lien states" because they have their own mortgage system. The Law of Property Act of 1925 made mortgage laws in England and Wales very similar to those in the U.S. In 1934, mortgages became popular again in the U.S., and the Federal Housing Administration helped make it easier for people to buy homes by lowering the down payments. At that time, about 40% of people in the U.S. owned their own homes. Since interest rates have gone down, that number is now closer to 70%.
Even though mortgages have changed over time and now come in many different forms, they are still, at their core, the same kind of contract they were when they first started. There are now a lot more laws and rules to protect the buyer, the seller, and the creditor. There are also many ways to lock in a low interest rate. You just need to talk to your mortgage broker about what the rates are now and what kinds of programmes they offer to keep those rates low for the life of your loan.
